Monday, September 26, 2005

The Dubai International Financial Exchange, or DIFX, kicks off trading Monday with a modest listing of five stock index certificates tracking major European, Japanese and U.S. stock markets.

By the flashy standards of this wealthy sheikdom, it's a subdued beginning.

"There will be no financial or real fireworks here on day one," admitted DIFX Chairman Lynton Jones, a veteran executive of the Nasdaq Stock Market and former chief of the International Petroleum Exchange.. . ."If we launch the market with an exciting IPO on day one, we'd be inviting the sort of frenzied activity that takes place in this part of the world during those events," he said. "We don't want that. We want to behave responsibly and make sure the whole thing works."

But Jones and Dubai's ruling sheiks hope the market will lure small and medium-sized foreign companies from the Emirates and beyond to list shares in Dubai, with the promise of strict market regulation and oil-rich Gulf Arab investors.

DIFX has opened listing talks with some 200 companies in the Middle East, India, South Africa and China, Jones said.

By the end of the year, Jones hopes to have close to 20 firms listed, through initial public offerings. Previous reports have valued those offerings at between $50 million and $1 billion.. . .The DIFX borrows characteristics from Nasdaq, quoting shares in U.S. dollars and existing solely as a computer network without a trading floor. For now, the DIFX will buy and sell shares for only three hours a day, between 2 p.m. and 5 p.m. local time.

And, like the world's biggest exchanges, the DIFX promises transparency and strict regulation, in contrast to freewheeling local stock markets with scant disclosure requirements. Jones reckons rigid DIFX rules will help raise corporate governance standards across the Middle East, eventually making regional companies more attractive to international investors.